|‘Ain’t no (Texas) mountain high enough’ ||‘Ain’t no (Texas) mountain high enough’ ||David Jones||Jones, D.||2018-07-12T05:00:00Z||Land|
A friend of mine from New York once told me, “Texas would be perfect if only it had mountains." I asked, “What do you think of when you think of mountains?"
“The Appalachians," she replied.
She was surprised when I told her Texas has 56 peaks higher than Mt. Mitchell (6,684 ft), the highest mountain in the Appalachians. In fact, Texas has 63 mountains more than a mile high (measured from sea level).
The next spring she traveled to far West Texas and returned a believer in Texas mountains.
She found some Texas peaks, but it was a long drive from Dallas. Of the 150 “most isolated major summits of the United States," three are in Texas.
Nine of the ten tallest Texas peaks (including El Capitan, above) are in Culberson County where elevation ranges from 2,900 to 8,751 ft. The latter elevation is the summit of Guadalupe Peak, the highest point in Texas.
Of course, when Texans talk about heading to the mountains, they probably are talking about the Colorado Rockies or the Sierra Blanca Mountains of New Mexico. One thing is for certain. They aren't talking about the Appalachians.
Ten Tallest Texas Mountain Peaks
|Shopping for rural property: Minerals, restrictive covenants, the environment, and taxes||Shopping for rural property: Minerals, restrictive covenants, the environment, and taxes||Charles Gilliland||Gilliland||2018-07-05T05:00:00Z||Land|
This is part two of a two-part series designed to help Texans make better real estate decisions about purchasing rural land.
Mineral rights. Mineral ownership can be important for land buyers, especially when less than half the minerals transfer with the ownership. Mineral owners dominate over surface owners. This means a mineral owner, or the lessee, can enter the property to extract minerals without the landowner's permission.
Furthermore, if the current owner has an existing lease with a mineral producer, that lease remains in force even if the minerals transfer with the surface.
TAKEAWAY: Before buying rural property in Texas, always ask about mineral rights and potential mineral exploration.
Restrictive covenants. Some land titles contain restrictive covenants that constrain use. Restrictive covenants are sometimes called deed restrictions, and they typically attempt to ensure a minimum level of land use, such as requiring an owner build a home with specified minimum square footage.
TAKEAWAY: Most problems with restrictive covenants occur when a buyer is uninformed. Identify possible restrictions before the transaction is completed. Both buyer and seller should take them into account.
Environmental regulations. Environmental regulations may signal potential problems for landowners. Consequently, buyers should identify possible issues prior to closing the deal. Endangered species regulations or the presence of wetlands can limit land-use options. In addition, the presence of hazardous substances may create an onerous liability for anyone taking title to land.
Federal law protects designated endangered species and requires the preservation of their habitat. Owners of land inhabited by an endangered species will likely find severe restrictions on land use. In some cases, restrictions have halted most human activity in endangered species habitats.
TAKEAWAY: Be aware of existing endangered species habitats and know about threatened species that may acquire endangered status in the future.
Property taxes. The appraisal method used to determine taxes may affect price negotiations. In Texas, if the current owner is being taxed under the open-space provision, the liability for a potential rollback tax passes to the new owner.
Open –space treatment depends on establishing a record of past and continuing land use for agriculture or timber production. Providing wildlife habitat can qualify as an agricultural use. When land receives open-space treatment, property tax liability depends on agricultural-use value rather than market value.
Generally, open-space status results in a substantial tax reduction. In Texas, however, when land use changes, the tax code imposes an additional tax equal to the difference between taxes based on market value and taxes based on use value for the previous five years. Interest on the taxes is due, too.
Frequently open-space tax treatment creates no difficulties, but potential problems emerge when the seller has benefited from reduced taxes and a buyer adopts a nonqualifying land use soon after purchase.
TAKEAWAY: Changing land use triggers a rollback and imposes a tax lien plus interest on the land. The buyer typically assumes the added tax burden.
A 144-page book Buying Rural Land in Texas by Dr. Charles E. Gilliland is in its second printing and available from the Texas A&M University Press. Texas rural land data by region is available on the Real Estate Center's website.
Buyers unfamiliar with properties in their target area, property values, or the legal documents involved should gather facts and seek help from competent legal and rural real estate professionals.
|Shopping for rural property: Location, property rights, leases, and undivided interests||Shopping for rural property: Location, property rights, leases, and undivided interests||Charles Gilliland||Gilliland||2018-06-28T05:00:00Z||Land|
This is part one of a two-part series designed to help Texans make better real estate decisions about purchasing rural land.
Focus on specific locations. To find the right property, make a list of desired property attributes. Clearly define the major land use you envision. Specify the physical characteristics needed to support that use. Soil types, topography, hydrology, access, and numerous other features determine the possible uses of a site.
TAKEAWAY: More than anything else, location defines a tract's appeal and potential.
Understand property rights. Property rights define legal control. Combined with property characteristics, property rights support the land's market value. Both property rights and characteristics have a critical influence on the choice of property and price negotiations.
Identify both physical attributes and detractions. View the property as if you intended to resell it. Consider if there's an attribute that would likely repel other potential buyers; something that's unimportant to you may be a problem when you try to sell it. For example, if a current seller has placed a conservation easement on the land, provisions in the agreement may cause potential buyers to look elsewhere.
Property rights issues encompass everything from verifying ownership to identifying easements and land-use restrictions.
TAKEAWAY: Because they specify the potential legal uses of the land, available property rights may be more important than physical features.
Lease provisions. Initially, existing grazing or farming leases may seem insignificant. Most run for short periods. Many are renewed annually. However, lease provisions may exert a decided influence on the purchase process when they specify a right-of-first-refusal.
You don't want to invest time and resources to locate and negotiate terms for a property if it turns out you just negotiated sale terms for an existing tenant.
TAKEAWAY: Consider passing on properties with a right-of-first-refusal clause, or at least investigate the tenant's appetite for the property.
Undivided interests. Difficulties can arise when several individuals own undivided interests. Undivided interests complicate the negotiation process, especially when not all owners want to sell.
TAKEAWAY: Although they do not automatically guarantee problems, undivided interests may present a negotiating challenge.
Buyers unfamiliar with properties in their target area, property values, or the legal documents involved should gather facts and seek help from competent legal and rural real estate professionals.
Editor's note. The 144-page book Buying Rural Land in Texas by Dr. Charles E. Gilliland is in its second printing and available from the Texas A&M University Press. Texas rural land data by region are available on the Real Estate Center's website.
Dr. Gilliland is the Center's land market expert and has been studying land prices since the 1980s. Known throughout the state as the man to go to if you have questions about Texas land, Dr. Gilliland was inducted into the Farm Credit Bank of Texas Hall of Honor in 2010 for his "significant contributions to agriculture."
|Quick points on Harvard's housing study||Quick points on Harvard's housing study||Josh Roberson||Roberson||2018-06-19T05:00:00Z||Economy|
|Harvard’s Joint Center for Housing Studies released its 30th Annual State of the Nation Housing Report today. Although their analysis is primarily national in scope, here are just a few key points and their relevance to the Texas housing market.|
Homeownership across the country is at a historic low. This has not been the case for Texas. While homeownership rates both nationally and in Texas (currently at around 64 and 62 percent, respectively) have been in decline since the Great Recession, Texas is far from its most recent low point—in the early ‘90s when homeownership dipped to the upper 50 percent range.
Immigrant households will play a larger role in growing housing demand. Texas is one of only a few larger states benefitting from positive net migration, which means more people are moving in than out. While much of this migration comes from households moving from other states, that source has tapered down while international households continue to provide steady growth (see figure).
Lower-cost neighborhoods (those with homes priced at or below 75 percent of the median home price) in higher-priced metros (those with median home prices at or above $250,000) have realized the highest growth rates over the past five years. This is certainly the case within the Austin and Dallas metros. The map highlights a handful of Austin neighborhoods that fit this description. For more on Dallas housing prices, check out my recent article “Dallas’ Affordability Puzzle.”
Overall multifamily housing rent growth is cooling. Much of this is due to falling demand for higher-priced units while lower-priced units remain steady. Like the single-family market in Texas, inventory of lower-priced units is becoming scarcer with much of the new construction pipeline focused on the higher-priced market. For a wealth of information about the apartment market near you, check out the multifamily resources under market research on our website.
|Youthful Texas weighs on homeownership||Youthful Texas weighs on homeownership||Wesley Miller||Miller||2018-06-19T05:00:00Z||Economy|
The newest report by Harvard University’s Joint Center for Housing Studies (JCHS) reflects on the evolution of the nation’s housing market over the past 30 years. While the quality of the housing stock improved, serious structural issues developed in the aftermath of the 2007 housing crash, such as the sluggish supply-side response and diverging incomes and home prices. These challenges similarly plague the Texas market and were discussed in a previous blog post, “Housing Bubble’s 10th Burst-Day.”
The JCHS study dives deeper into demographic trends that underlie housing demand. Aging baby boomers helped stabilize the U.S. homeownership rate around 64 percent after a decade-long decline. In fact, the 65-and-older age group was the only cohort with higher homeownership rates relative to 1987. As a result of steady domestic and international migration, Texas’ population mix is younger than the national average (Table 1). While this benefits the state’s economic dynamism, it also weighs on homeownership rates. The Lone Star State continually lags the nation by about 2 percent despite relative housing affordability.
The state’s diverse population presents a similar challenge as racial and ethnic homeownership disparities persist (Table 2). For example, Texans of Hispanic descent represented 31 percent of total housing units, but only 28 percent of those units were owner-occupied in 2016. The gap is even larger for black homeownership and has widened since the Great Recession. These imbalances conflict national consumer surveys on renters, which suggest the desire to own a home transcends racial boundaries.
The impacts of today’s housing hurdles, however, are widespread and stretch to all corners of the market. Rising home prices and rental rates are straining Americans’ budgets and living standards. If left unaddressed, diminishing housing affordability could reverberate through the economy and substantially hinder our well-being. With real income levels stubbornly stagnant, attention is directed toward reducing construction costs. The JCHS suggests improvements in federal policies to protect those most vulnerable while addressing the long-run structural issues. Whatever the solution, action is needed before housing affordability becomes a Texas-sized crisis.
|What a difference a hurricane makes||What a difference a hurricane makes||David Jones||Jones, D.||2018-06-14T05:00:00Z|
Rent growth is slowing nationally, according to a new report from Apartment List. This slowdown in rent growth is partially attributable to an increasing supply of new rental inventory in many markets.
Their estimates show that annual rent growth rates at the national level have been trending downward for the past few years. Although rent growth has slowed, it remains in positive territory. Rents are still increasing, just at a slower pace.
While Apartment List's national index provides a valuable overview of high-level trends, there is significant variation across cities. The table ranks the nation's 25 largest cities from fastest to slowest rent growth for each of the past four years.
City rankings change substantially from year to year.
Houston ranked last in rent growth rankings last year, with a 2.8 percent decline in prices, but the city now ranks second with a 3.4 increase over the past year.
Houston presents a unique example, notes the study. The devastation of Hurricane Harvey damaged or destroyed a substantial number of homes in the city last August. Before Harvey, Houston had one of the nation's highest vacancy rates but now has a shortage of available rental units.
Although many landlords froze rents in the immediate aftermath of Harvey, Apartment List data show a sharp spike in rents in Houston through the winter months, a time when rent prices normally fall. More recently, prices seem to have stabilized.
It will be interesting to see where Houston rents are a year from now.
Want to know more? The Real Estate Center has several recent articles related to the impact of Hurricane Harvey on Houston.
|Renovate, replace, recoup?||Renovate, replace, recoup?||David Jones||Jones, D.||2018-06-06T05:00:00Z||Housing|
Unusually low home inventories and the high cost of new housing have put move-up homeowners in a bind. Many are turning to remodeling as a way of adding amenities and value to their current housing. However, the recently released Cost vs. Value Report for 2018 from Remodeling magazine notes many of the 20 most popular remodeling projects aren't generating the resale value they once did.
Craig Webb, editor-in-chief of Remodeling magazine, says the report tells what consumers can expect to pay to have a pro do one of the common remodeling projects and how much money real estate experts say you can expect to get back from a project when your home is sold.
This year's report covers 149 U.S. metros. Not surprisingly, the nationwide cost for all projects is up at least 2 to 5 percent from last year. “At least" is important because the cost data were compiled before Hurricane Harvey, fires, and some other national disasters. The report doesn't take into account the shortages of building materials in damaged areas, which sent prices soaring. Meanwhile, the value real estate pros gave went up for only about two-thirds of the projects studied.
Texas remodeling numbers are reported in the West South Central Region of the report. Metro-specific data is included for Austin, Beaumont, Corpus Christi, Dallas, El Paso, Houston, McAllen, San Antonio, and Temple. In the table, yellow numbers include Texas. U.S. numbers are gray.
Some of the biggest national decreases in value were for some of the most expensive projects, such as the addition of a master suite or a major kitchen remodel. That's a turnaround from 2017 when big-ticket items showed some of the biggest gains.
The average cost recouped nationwide for the 20 projects was 57 percent, about 1 percent lower than for the same projects last year. In 62 of 100 U.S. markets, at least one project returned more than 100 percent of the cost. Five of the top six projects with the biggest bang for the buck were for work done on the outside of the house.
Garage door replacement led all projects nationally with 98.3 percent cost recouped. In the Texas region, manufactured stone veneer was tops with 93.4 percent.
In the Texas region, only four projects recouped more this year than last: bathroom addition, bathroom remodel, deck addition (wood), and window replacement (vinyl).
The report notes a big difference between replacement and remodeling jobs.
“If you have to choose between them, pick the replacement work," said Webb. “It's always had a bigger payback than remodeling, and that's even more the case this year. Replacement jobs had a payback of 76 percent. That's 20 percent more than the cost recouped for remodeling.
“Of course, many remodeling projects aren't done solely to boost the home's value, and if you're not planning to move, knowing the current cost-value ratio won't do you much good. Instead, just focus on the cost side of the cost-value report."
Remember, local costs vary. Seek the advice of reputable remodelers and real estate professionals.
|Building materials are 25 percent of new home sales price||Building materials are 25 percent of new home sales price||David Jones||Jones, D.||2018-05-24T05:00:00Z||Housing|
The news this week about how much rising land prices add to the cost of a new home is only part of the story. Building materials themselves, particularly lumber, are going up as well.
According to a new Bank of America Merrill Lynch report discussed in builderonline.com, prices for homebuilding materials increased 3.6 percent annually from 1982 to 2017. During that time, building materials in a median-priced house went from $23,073 to $80,566.
Materials constitute roughly 25 percent of the sales price of a new home. The report — “Who Builds the House" — puts the total annual cost for building materials in new U.S. single-family residences at $55 billion.
“Again, nobody builds to an average or aggregate, so for different geographical markets, different square footages, different customer segment specs, different national and local deals and installation nodes, these figures can become far from precise when it comes to applying them to specific projects," writes John McManus, director for the Residential Group at Hanley Wood.
The Builder article notes lumber prices have trended higher since duties of more than 20 percent were applied to Canadian softwood lumber in 2016. Imports from Canada declined from 16 billion board feet in 2016 to 14 billion in 2017.
Earlier this year, the Wall Street Journal reported lumber was in short supply and prices rising as wildfires destroyed prime forest:
“Material prices now rival labor shortages as builders' main concerns, a National Association of Home Builders survey showed in January. Prices for common building varieties like spruce and southern pine are at or near records, according to price-tracking publication Random Lengths. March-dated lumber futures at the Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board feet last week after climbing more than 50 percent in 14 months."